Review on Bancor by Fanuel PORPORTY
Bancor has been inventive in solving the token liquidity problem.
Bancor is a blockchain protocol that offers its users to perform conversions directly from its network. Bancor wants to bring liquidity to the cryptocurrency market thanks to its “Smart token”, the Bancor Network Token.
BNT is the Genesis smart token that will be deployed, establishing the BANCOR network, operating like its native currency. BNT has a reserve in ETH. Bancor's goal is to increase the liquidity of the cryptocurrency market to lead to the creation of an internet of values. Liquidity is not really a barrier for major crypto assets. However, illiquidity is a fundamental problem for hundreds of small-cap crypto assets. Among these hundreds of unknown tokens, we find the usual scams, but also assets pursuing a legitimate decentralized objective, but which failed to break through due to lack of visibility. According to the Bancor team, the majority of tokens face liquidity-related difficulties, making them difficult to trade. Which ultimately excludes them from the ecosystem.
In order to compensate for the lack of liquidity, the Bancor protocol is based on Smart Tokens. These allow you to dispense with the presence of a second party when you want to make an exchange. Self-executing contracts convert any ERC-20 token to another ERC-20 token. This whole process is internal to the Bancor blockchain. There isn’t really a two part exchange like there would be on an exchange. Rather, a conversion from one ERC-20 token to another from the Bancor blockchain.
Pros
- Bancor has identified a serious problem: illiquidity. And, provides a most satisfactory solution.
- A wide range of ERC-20 tokens available. Bancor is a boon for some unknown tokens.
- The use of smart tokens is unprecedented. The Bancor team seems to have developed this promising innovation. The price adjustment method is different from that of an exchange, since no shorts are possible on the pairs.
Cons
- No fiat deposit. You must have a currency supported by smart tokens before you can convert.
- The use of the Bancor protocol requires a good knowledge of the Ethereum ecosystem
